IIFCL plans to start advisory services subsidiary by March

New Delhi: State-owned India Infrastructure Finance Company (IIFCL) has said it proposes to operationalise its project advisory subsidiary by the end of March next year.

"We hope the new subsidiary begins its operations by the end of the current fiscal," said IIFCL Chairman and Managing Director S K Goel.

The board has approved setting up a separate subsidiary of IIFCL for the Project Development Advisory Services, he said.

This subsidiary would provide advisory services for infrastructure development, he said, adding that this would greatly help in timely development of projects.

On the recent changes on 'Takeout' financing by the government, Goel said the modifications have been carried out to make the scheme more attractive to both infrastructure project developers and banks.

Takeout financing is a procedure under which loans given by banks to infrastructure firms are sold to other institutions.

This is to enable banks recover their much-needed funds ahead of the payment schedule under the loan agreement. This is done to address the asset-liability mismatch.

Transparent and a competitive pricing for Takeout Finance Scheme has been put in place, Goel said.

The pricing of Takeout shall range from 0.25 percent to 1.5 percent over the benchmark rate of lending of IIFCL which is currently 9.65 per cent depending upon the post commercial operation date (CoD) credit rating of the project, he said.

Major concession in pricing has been announced for PPP projects and the current rate of Takeout would range from 9.90 percent to 10.85 per cent depending on the ratings of the project, he said.

As part of the modification, he said the government has allowed receiving of proposals for Takeout from borrowers also, he said.

Existing lenders would be incentivised by way of passing on the Takeout fee to the extent of 0.3 percent of the takeout loan to the borrowers.

In case of road sector projects, Takeout can occur at any time after actual CoD, he added.